The government has exempted interest payments on the New Development Bank’s (NDB) Maharajah INR Bonds from tax deducted at source (TDS) for eligible holders from tax year 2026-27 onwards.
The exemption, notified by the Ministry of Finance on October 19, applies to bondholders who are residents or foreign institutional investors (FIIs), as defined under the Income-tax Act, 2025.
What are Maharajah INR Bonds?
Maharajah INR Bonds are onshore, rupee-denominated bonds issued by the New Development Bank. In an August 27, 2026, circular, the Insurance Regulatory and Development Authority of India (IRDAI) said NDB proposed to raise ₹25,000 crore through these bonds over five years.
According to the circular, the proposed proceeds are intended for general corporate purposes, including financing or onward lending for sustainable development, sustainable infrastructure, and green and social projects in India.
What is the TDS exemption?
The October 19 notification specifies that no TDS will be deducted on interest payments made by NDB to eligible holders of its Maharajah INR Bonds during tax year 2026-27 and subsequent tax years.
The exemption applies to the relevant interest payments covered by Section 393(1), Table Sl. No. 5, or Section 393(2), Table Sl. No. 17, of the Income-tax Act, 2025, as applicable.
Does the exemption mean the interest is tax-free?
The notification provides relief from TDS on the specified interest payments. It does not expressly state that the interest income is exempt from income tax.
What reporting requirements apply?
NDB must furnish information as required under Schedule VII, Table Sl. No. 49, of the Income-tax Act, 2025, and the applicable provisions of the Income-tax Rules, 2026.
The notification comes into force on the date of its publication in the Official Gazette.
NOTE TO READERS
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers should consult certified experts before making any investment decisions.